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Restructuring plan coming for Brazilian utility, hydroplant operator

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Utility company and hydro project operator Eletrobras said it will complete its restructuring plan with the next 30 days, Brazilian sources have reported.

"The plan is to reduce costs, increase revenues, and have a more appropriate financial structure," Eletrobras President Jose da Costa Carvalho Neto told state news service Agencia Brasil earlier this week. "We are currently considering a number of alternatives."

The restructuring is largely a response to sweeping energy tax reform announced by Brazilian President Dilma Rousseff in September 2012, which, after its ratification earlier this year, will force power distributers to slash tariffs by 18% for residential customers and more than 30% for industries.

HydroWorld.com reported in November 2012 that the new policy will have a marked effect on Eletrobras' (NYSE: EBR) budget, with profits projected by some analysts to drop at least 30% through the next year.

The company has not said specifically how it will cut costs, though it says it will utilize "synergies between subsidiaries and propose a framework for management of generation assets, transmission and distribution compatible with the new regulatory landscape."

Sources said Eletrobras will submit a preliminary plan to Brazil's Ministry of Mines and Energy within the next two weeks.

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